ACTU: Unemployed allowance increase required

A major reform of Australia’s income support system is needed to help unemployed people find decent, secure work.

ACTU President Ged Kearney said reform must start with a $50 a week rise to the Newstart payment, which had not increased in real terms since the early 1990s and was barely enough to live on, let alone pay for the costs associated with finding a decent job.

“The rate now so low it is just 18% of average wages in Australia and widely regarded among both the welfare and business communities as a major contributor to entrenching people into long-term poverty, with insecure work playing a large role,” Ms Kearney said.

“Newstart is a bedrock component of Australia’s social protection system, but it is letting the most vulnerable members of our community down.”

In its submission to the Federal Government’s Allowances Inquiry, the ACTU has called for welfare reform, including an increase to the Newstart payment, an increase of the level at which the payment starts to be withdrawn when people begin work, and a broader independent inquiry into the effects of insecure work on the welfare system.

As part of the submission, the CPSU conducted a poll of its members working at the federal Department of Human Services, including frontline Centrelink staff who spoke of their experiences with unemployed income support recipients.

The poll found almost two thirds of DHS workers believed the current Newstart rate was inadequate, while 75% reported insecure work was keeping many people dependent on welfare and unable to support themselves thanks to short-term and inadequate hours of work.

“Centrelink workers told us that many people in insecure jobs drop in and out of the payment system when their hours dry up or they suddenly lose their casual, contract or labour hire jobs,” Ms Kearney said.

“While the unemployment rate is around its lowest level since the 1970s, insecure work has risen and casual and contract work represents a larger share of employment than ever before, now affecting 40% of the workforce.

“We know that people working insecure jobs find it hard to get a mortgage or plan their lives, but now this new research confirms the devastation it is wreaking on the most vulnerable members of our community.

“The income support system needs to be designed for the labour market we have today, not the one we had decades ago.

“Allowing unemployment support payment to erode over time doesn’t just affect people who are currently out of work; it exposes all workers to greater risk of poverty if they lose their job.

“At the moment, Australian workers on average wages who lose their jobs receive a bigger cut to their incomes than their counterparts in any other OECD country, which can leave people unable to pay housing costs, cover loans or transport costs.”